Riot Platforms Takes 13% Stake In Bitfarms To Foil Hostile Takeover

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As an experienced financial analyst, I’ve closely followed the developments between Riot Platforms and Bitfarms with great interest. Riot’s recent acquisition of a 13.1% stake in Bitfarms was a bold move that came as a surprise to many, given Bitfarms’ implementation of a shareholder rights plan, or “poison pill,” to thwart potential hostile takeovers.

 

Riot Platforms, a business specialized in cryptocurrency mining, recently disclosed a significant investment in Bitfarms by acquiring approximately 13.1% ownership through the purchase of around six million ordinary shares. The SEC filing, dated June 11, unveiled this information. The transactions, valued at over $111 million, were completed in three separate instances.

Riot Disputes Bitfarms’ Takeover Defense Measures

The hostile takeover attempt by Riot Platforms was revealed when Bitfarms implemented a shareholder rights plan on June 10th. Also called a “poison pill,” this strategy aims to obstruct Riot from acquiring more than a 15% stake by reducing the value of existing shares. Jason Les, CEO of Bitfarms, voiced concerns over this maneuver, stating it was inconsistent with “established legal and governance practices.” He added that the standard threshold for such measures is typically 20%, implying that Bitfarms may have gone too far in their defensive efforts.

Despite Bitfarms’ justification for adhering to Canadian securities laws, which enabled Riot to move forward with the acquisition, this development has sparked significant interest in the stock market, particularly on the Nasdaq, resulting in a more than 56% increase in Bitfarms’ share price.

Bitfarms CEO Resigns Amidst Takeover Turmoil

The ongoing struggle for control at Bitfarms is marked by significant leadership shifts. Most recently, CEO Geoffrey Morphy departed following a lawsuit against the company. Nicola Bonta currently serves as interim president and CEO in his absence. Riot, a major corporation, has publicly criticized Bonta, accusing him of poor corporate governance and advocating for his removal from this role.

The ongoing leadership dispute at Riot Platforms adds another layer of complexity to an already complex saga surrounding their proposed $950 million acquisition of Bitfarms in May. This deal, which represented a 24% premium over Bitfarms’ average share price, aligns with Riot’s strategy to strengthen its presence in the cutthroat cryptocurrency mining industry.

 

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2024-06-13 00:05